Posted by: Ed Tittel
On July 5, I wrote a blog post here entitled “Repeat After Me: ‘Slow Growth Mode,’” wherein I laid out John Challenger’s analysis for that condition in the US economy based on employment growth. Last Week, the US Commerce Department confirmed this apprehension with a report that the US economy grew at an annual rate of only 1.5 percent for the 2nd quarter of 2012 (April through June), mostly as a reflection of ongoing pullbacks in consumer spending. An AP report on this information also states that “growth at or below 2 percent isn’t enough to lower the unemployment rate,” which confirms what Challenger observed in his earlier employment observations this month. Given that many economists expect little or no change to these low/slow growth figures for the rest of 2012, and possibly into 2013, there’s not much relief in sight, either.
For the past three years or so I’ve been advocating a “hunker down, stay put” approach to IT employment. This means “if you’ve got a job, don’t leave it unless you have a firm and better offer in hand.” Alas, it also means that if you don’t have a job in IT right now, it’s not going to be getting easier to find one any time real soon. This makes things tough for the annual crop of college graduates, to be sure, but even harder for IT professionals at later stages in their careers who find themselves out of work owing to layoffs, staff reductions, or for various other reasons. In fact, the more money you need to make, the harder that makes it to find another job if and when you might be forced onto the job market.
Conventional wisdom is that is takes up to 1 month to find a job for each $10,000 of annual salary you wish to earn. I’m guessing that in the current economy that time interval may have doubled — or more — particularly for those at the higher end of IT pay scales. The notion of a “living wage” or “just wage” for a family of 4 dictates that at least $60,000 of income is needed just to make ends meet for most American families. The math says that somebody making that wage would take 6 months to find a job in a normal economy, and a year or longer to find a wage in a weak economy like our present one. Add to that interval as out-of-work IT pros seek to replace typically higher incomes and you’ve got a hardship that can weigh heavily on affected families. It’s hard enough for families to shoulder the burden of maintaining a cash cushion of 3 to 6 months, as most financial professionals recommend. I’m guessing that even though more savings than that may be needed to bridge any unemployment gaps that should occur, many families can’t afford big enough cushions to get them through such gaps without financial damage. This really hurts, and spells yet another threat to retirement savings for mid- to late-career IT professionals who find themselves out of work in this economy. Ouch! That hurts!!!